Your auto insurance renewal notice may contain an unwelcome surprise. Car insurance costs rose 20.3% in 2023, according to the Bureau of Labor Statistics, largely in response to higher costs for replacement parts. Although insurance companies typically don't raise rates in the middle of a policy term, rates can go up—even without a change in coverage—at renewal time.
If you've recently received renewal documents (or expect to soon), you may want to explore your options before re-signing with your current insurance company. Here are nine key steps to take before renewing your car insurance policy, to secure the best possible rates.
1. Check Your Policy Renewal
Look for a policy renewal notice about a month before your policy is set to expire. Most auto insurance policies renew every six or 12 months. Here are three critical things to check:
- When does your policy end?
- Is your rate increasing?
- Will your policy auto-renew?
Auto-renewal means you don't have to do anything to re-up your current insurance. Although that's convenient, it may not be your best move. Before you renew your policy, you may want to double-check your coverage and rate to make sure you're getting the best available deal. This is also a good time to weed out unnecessary coverages adding to your policy cost.
2. Consider Your Coverage
Renewal time is a great moment to review your coverage and make any changes you've been meaning to make. Questions you should consider include:
- Do you have the right liability coverage? You need enough coverage to meet state minimums and requirements set by your finance company if you lease or finance your car. You also want coverage to protect your assets in the event of a major accident. Beyond that, more coverage may be unnecessary.
- Do you need collision coverage? Collision coverage may also be a requirement of your finance company. However, if you have an older car that's already paid for, you may want to weigh whether this coverage is worth the cost.
- Can you raise your deductible? A higher deductible usually means a lower rate. It's a good idea to make sure you have enough money socked away to cover the deductible amount if you need to pay it.
- Are there extras you can cancel? If you need to cut corners, nonessential coverage may be a place to start. For example, many new cars come with roadside assistance, so you don't need this additional coverage. Glass breakage or rental car coverage also may be optional.
3. Adjust for Life Changes
Life changes that can affect your car insurance rate include getting married, moving to a new neighborhood, having a child reach driving age or switching to remote work (and ditching your commute). Note that some life changes may raise, not lower, your auto insurance rate; either way, your policy should accurately reflect your life.
4. Shop for the Best Quotes
An online marketplace can help you shop for the best auto insurance rates from several providers at once. Although you can call around or visit the websites of different insurance companies individually, online resources allow you to see a range of results from top insurers, so you can find the best deal for you. Comparing car insurance rates with Experian, for example, gets you multiple quotes from top providers all in one place, so you can make an informed choice.
In addition to casting a wide net with multiple insurers, find out whether you can save money by bundling your auto, home and life insurance when you choose the same provider. Many insurance companies offer multi-policy discounts that can lower your rates on multiple types of insurance.
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5. Check for Group Rates
While you're in comparison mode, don't overlook potential savings from group insurance if it's available to you. Some employers offer group auto insurance as an employee benefit, which may save you money over an individual policy. Alumni and professional organizations are another place to check for access to group rates.
6. Ask for Discounts
Auto insurance companies offer a wide range of discounts, including good driver, low mileage, good student and new car discounts. Some insurers will lower your rate if you take an online defensive driving course or agree to use an app that tracks your driving habits. Call the insurer or check their website for a list of available discounts.
7. Improve Your Credit
In many states, insurers can look at credit-based insurance scores to help determine your car insurance rate. Although these scores are different from the credit scores lenders use, some of the same factors that affect your credit scores can also affect your credit-based insurance scores. These include your on-time payment history and current debt balances, so focusing on good credit habits going forward may improve your auto insurance outlook in the future.
In the meantime, checking your regular credit score and report might give you a general reading on whether credit issues could be affecting your auto insurance rate.
8. Pay Your Whole Premium
If you have the cash on hand, paying your whole premium at once could lower your rate or save you money on interest and finance charges versus paying in monthly installments. However, using a high-interest credit card to carry the balance will almost certainly cost you more than monthly payments to your insurance company. Check your costs (or savings) both ways before you proceed.
9. Make the Switch
If you're happiest with your current insurer, stay. Hopefully, there's a loyalty discount or policyholder dividend in it for you. However, if you've found a better deal with a new insurer, take these simple steps to cancel your current insurance and switch seamlessly:
- Confirm your new policy's start date. Make sure you keep your current policy active until your new one is in force.
- Call customer service at your current insurance company and notify them that you want to cancel coverage. They may ask you to send written notification of your request.
- Get confirmation of the cancellation from your current insurer, and follow up to make sure your policy and billing have been discontinued. You should receive a refund for any coverage you've paid for in advance.
If your cancellation doesn't go through as planned, you aren't stuck with your policy until the next renewal period: You can cancel your policy at any time.
The Bottom Line
Although reading through your insurance policy and gathering quotes doesn't exactly qualify as fun, taking the time to explore your options can help you confirm that your current policy is still the best fit—or find a better deal on a new one. Comparing car insurance rates can help you make an informed choice on whether to renew or not to renew.